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Definition: Ripple


A financial settlement system for banks and payment providers from Ripple Labs Inc., San Francisco (www.ripple.com). Ripple is a global decentralized network of peer-to-peer servers known as "RippleNet." Introduced in 2012, Ripple was created to transfer any type of currency from one party to another, and dollars, Euros, etc. are exchanged for XRP tokens. Although XRP is a cryptocurrency, it is not based on traditional blockchain processing but rather its own open source protocol the company calls an "advanced blockchain technology." See cryptocurrency and blockchain.

Also Finite, But Faster
To prevent hyperinflation, like bitcoins, the XRP supply is finite. However, while bitcoins come into existence via the mining process, Ripple releases one billion XRP from its escrow account every month. Unlike Bitcoin, Ripple uses minimal electricity and is capable of settling a transaction in a couple of seconds.

A Consensus System
The Ripple servers go through an iterative process to determine which subset of transactions becomes the next XRP ledger. When a supermajority of servers agree, the ledger is added. In contrast, Bitcoin uses a competitive process to add the next block to the blockchain. See Bitcoin mining.

Ripple Product Suite: xCurrent, xRapid and xVia
xCurrent is the Ripple software that lets banks settle payments, which includes tracking and real-time confirmations. For emerging markets, xRapid provides a liquidity service, and xVia is the programming interface (API) that ties xCurrent and xRapid together.

Smart Contract Settlements
Although Ripple leaves it up to other applications to handle smart contracts, Ripple provides tools for settling the contracts. See smart contract.